February 2018

India Light Vehicle Sales Update

January Sees LV Sales Rise by 12% YoY and Strong LCV Growth

The Indian market is off to a strong start in 2018. Light Vehicle (LV) wholesales in January grew by 12% year- on-year (YoY) to 333k units. Passenger Vehicle (PV) sales rose by 9% YoY to 273k units, while Light Commercial Vehicle (LCV) volumes soared by a surprisingly high 30% YoY to 60k units. While PV sales in the month were largely in line with our projections, the LCV market outperformed our expectations by a considerable margin.

On a seasonally adjusted annualized rate (SAAR) basis, sales in January climbed to 3.90 mn units, compared to 3.53 mn in December and 3.87 mn in November. A significant point to note is that the January SAAR hit a four-month high.

The twin negative impacts of the demonetization drive and the implementation of the Goods and Services Tax (GST) appear to have diminished. This may also have urged small- and medium-sized enterprises to return to the market for new LCVs, which, in turn, seems to have resurrected the momentum in inventory building.

Delhi Auto Expo

The Delhi Auto Expo in February witnessed several new model and update launches, but before we delve any deeper, we must note the importance of new entrant Kia’s presence at this key industry event.

Kia’s biggest highlight was its SP Concept, which is likely to be the design language for the upcoming Kia B- SUV, anticipated to be on sale in the second half of 2019.

The automaker also displayed 16 global models at the event, including all of its top-sellers. This has kept both analysts and competitors guessing as to its exact product plan for India, other than the SP Concept- based B-SUV.

Despite the doubt surrounding its future aims, Kia did reveal its hand to some extent. With the consumer appetite for Small SUVs showing no sign of abating, the automaker is developing a sub-four meter SUV for India and possibly China. We have added this model to our forecast as the Kia A-SUV and assume that it will arrive by early 2020.

This is then likely to be followed by a Premium hatchback, which we think could be the Kia K2 (Pride/Rio), by mid-2020. We also think that Kia may launch the Morning hatchback and Morning towards the end of 2020. All told, Kia is planning an aggressive product onslaught to disrupt the market and rapidly win over buyers.

Moving on, other major model launches and updates at the Delhi Auto Expo included the much-awaited next-generation Maruti- Swift and Hyundai Elite i20 facelift.

Toyota showcased the Yaris ATIV, which is to be sold as the Yaris in India. This critical offering from is due to hit showrooms by April.

At the same time, rival Honda orchestrated the global debut of the second-generation Brio Amaze at the motor show. As one of Honda’s key strategic markets globally, India was specifically selected to lead the launch of the revamped Brio Amaze when it goes on sale (possibly around mid-year).

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India Light Vehicle Sales Update

These new arrivals are bound to generate considerable enthusiasm in the market and should bolster volumes in the all-important Sub- segment. As well as the next -generation Swift, India’s market leader also unveiled a new concept car, dubbed ConceptFutureS. It alludes to the design of an all-new sub-four meter Sub-Compact SUV, likely to be positioned below the highly popular Vitara Brezza, suggesting that Maruti-Suzuki is aiming to further penetrate this fast-growing segment.

Forecast Change

The LCV segment’s strong start to the year convinced us to raise our 2018 forecast by 12k units. Note, however, that we left the PV outlook for the year unchanged and made no changes to the remainder of the forecast period.

The overall LV market in India this year is estimated to increase by 8% YoY to 3.98 mn units, following an expansion of 10% YoY in 2017. Looking ahead, we estimate a CAGR of 8%, with LV volumes exceeding 6.71 mn units by 2025.

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India Light Vehicle Sales Update

Market Top Lines Best Selling Models

Jan Growth YTD Growth 2018 Growth Jan Growth Share YTD Growth Share Sales 371,161 13% 371,161 13% PV PV 272,720 9% 272,720 9% 3,303,428 8% Maruti- 22,540 25% 8.3% 22,540 25% 8.3% LCV 60,628 30% 60,628 30% 672,170 10% Maruti- 19,134 -17% 7.0% 19,134 -17% 7.0% M&H CV 37,813 21% 37,813 21% Suzuki New Baleno 17,770 70% 6.5% 17,770 70% 6.5%

Production 454,267 0% 454,267 16% LCV PV 344,351 14% 344,351 14% 4,166,733 10% Tata Ace 14,070 88% 5.2% 14,070 88% 5.2%

LCV 69,369 27% 69,369 27% 730,511 15% Mahindra Imperio 6,225 48% 2.3% 6,225 48% 2.3% M&H CV 40,547 13% 40,547 13% Maruti-Suzuki Omni 6,155 -29% 2.3% 6,155 -29% 2.3%

Top Brands (Sales) Top Manufacturers (Production) # Brand Jan Growth YTD Growth # Manufacturer Jan Growth YTD Growth

1 Maruti-Suzuki 95,355 -7% 95,355 -7% 1 India 143,140 10% 143,140 10% 2 Hyundai 45,508 8% 45,508 8% 2 Hyundai Group 54,711 9% 54,711 9% 3 Suzuki 31,584 81% 31,584 81% 3 Cord Group 25,078 53% 25,078 53% 4 Mahindra 21,343 15% 21,343 15% 4 Mahindra 23,994 30% 23,994 30% 5 Tata 20,055 55% 20,055 55% 5 Renault- 18,899 -14% 18,899 -14% 6 Honda 14,838 -5% 14,838 -5% 6 Tata Motors 16,939 15% 16,939 15% 7 Toyota 12,351 19% 12,351 19% 7 Toyota Kirloskar India 13,010 11% 13,010 11% 8 Cord 9,450 18% 9,450 18% 8 Honda Cars India 12,959 0% 12,959 0% 9 Renault 6,919 -21% 6,919 -21% 9 Tata-Ciat 9,237 585% 9,237 585% 10 Volkswagen 3,418 -16% 3,418 -16% 10 Volkswagen Group 7,730 -36% 7,730 -36% 11 Datsun 3,242 0% 3,242 0% 11 Group 7,379 -16% 7,379 -16% 12 Jeep 2,244 2213% 2,244 2213% 12 Suzuki Group 7,184 N/A 7,184 N/A

Passenger Vehicle Passenger 13 Mercedes-Benz 1,337 10% 1,337 10% Vehicle Passenger 13 Škoda Auto 1,412 120% 1,412 120% 14 Škoda 1,270 4% 1,270 4% 14 Daimler Group 1,150 16% 1,150 16% 15 Nissan 968 -13% 968 -13% 15 BMW Group 769 30% 769 30% 16 BMW 869 22% 869 22% 16 Corce Motors 258 34% 258 34% 17 Audi 577 168% 577 168% 17 Premier Auto 178 -9% 178 -9% 18 Corce 336 33% 336 33% 18 Bajaj Auto 99 230% 99 230% 19 Land Rover 297 54% 297 54% 19 Volvo Group India 93 N/A 93 N/A 20 Volvo 221 105% 221 105% 20 Hindustan Motors 23 -76% 23 -76% 1 Tata 21,989 60% 21,989 60% 1 Mahindra 27,851 68% 27,851 68% 2 Mahindra 18,426 35% 18,426 35% 2 Tata Motors 20,368 29% 20,368 29% 3 Maruti-Suzuki 13,661 -5% 13,661 -5% 3 Maruti Suzuki India 14,958 -14% 14,958 -14% 4 Ashok Leyland 4,088 56% 4,088 56% 4 Corce Motors 1,742 17% 1,742 17% 5 Corce 1,620 3% 1,620 3% 5 Eicher Motors 260 42% 260 42% 6 Isuzu 446 238% 446 238% 6 Piaggio 128 -50% 128 -50% 7 Eicher 281 21% 281 21% 7

Commercial Vehicle Commercial 8 Piaggio 117 -55% 117 -55% Vehicle Commercial 9 10

28th February 2018

For further information contact Ms. Sukanya Tunhau, Phone +662 264 2050, [email protected] w ww.lm c-auto.c om Oxford ● Detroit ● Frankfurt ● Bangkok ● Shanghai ● São Paulo ● Tokyo 3

LMC Automotive

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